Smith & Wilkinson’s Post

part ,4 WINNING IN CORPORATE DEPOSIT THROUGH TRANSACTION BANKING For example, a price-sensitive client with a high amount of deposits at risk might require more aggressive pricing to keep deposits with the bank. Pricing optimization for deposit rates can boost a bank’s revenue by roughly 3 to 12 percent. The corporate and commercial division of a top ten global bank underwent a pricing process redesign—building a snapshot of customer profitability, creating transparency on each customer’s potential to contribute to the bank’s corporate portfolio, developing an internal benchmarking tool and another tool to help relationship managers, and organizing training for these managers. Revenue in the targeted portfolio rose 12 percent. 4. Revamp sales strategies Relationship managers, product specialists, and sales professionals all play a critical role in the effort to increase deposits. Crucial areas to work on include refocusing relationship managers on priority clients and supporting those efforts with data analytics and client management tools, as well as making sure all sales professionals are well versed in all the bank’s deposit products. The bank should consider setting rigorous deposit growth targets and tracking progress on those goals, creating a communication channel between relationship managers and the deposit desk to parse the success of various deposit growth initiatives, and encouraging the sales team to increase deposits. A midsize bank focused on small business and commercial banking was looking for a way to boost sales, make the most of data and analytics, and craft a new way of attracting and keeping deposits. The solution was to set up a way to drive sales to a targeted vertical, using third-party data and analytics, setting up a centralized sales team within the bank to call potential clients and generate leads, and training and coaching relationship managers to bring in more deposits. Within three months, the targeted vertical experienced deposit growth of more than 50 percent. The data used included a list of potential clients organized by industry and by region, along with their sales figures, market share, and banking balances, when available. The bank further customized its transaction banking services to offer a single package covering payments, receivables, financing, and the client’s operating account. The package came with simplified pricing and easy digital onboarding. 5. Attract deposits from cash-rich sectors Some businesses are sitting on cushions of excess cash that banks would love to attract as deposits. Relationship managers who are well versed in a specific industry can help the bank identify pockets of excess liquidity, and the bank can then offer a wider range of deposits and investment alternatives to try to bring in some of this funding. #africasglobalbank #bankofengland #worldtradecenter #cbn #standardcharteredbank #harvardbusinessschool #universityofchicago

Yesterday, when I discussed the U.S. Consumer Lending landscape and its susceptibility to key regulations, a colleague requested that I list the major regulations impacting the banking industry both broadly and from the consumer perspective. Here’s the list...one may research and get more on this! Several key OCC and federal regulations are poised to significantly impact the US consumer lending landscape in 2024: 1. Community Reinvestment Act (CRA) Overhaul: The final rule introduces new requirements for banks to delineate retail lending assessment areas in metropolitan and non-metropolitan regions where they have significant home mortgage or small business lending activities. This change aims to better capture the lending activities of banks that serve communities without physical branches, addressing the growing role of online and mobile banking. 2. Basel III Endgame Standards: The finalization of these international capital standards will impose stricter capital requirements on banks, extending some of these requirements to smaller institutions traditionally exempt from such stringent regulations. This aims to enhance the stability and resilience of the banking sector. 3. Consumer Protection Focus: Regulatory scrutiny will intensify on innovative products like Buy Now, Pay Later (BNPL) loans, emphasizing the need for rigorous credit risk and operational risk management practices. Banks offering BNPL loans will need to integrate these products into their existing compliance frameworks while addressing unique risks associated with them, such as fraud and credit reporting. 4. CFPB Rules on Nonbank Registries: Was expected in March 2024, these rules will require nonbank financial services providers to register information on terms that limit consumers' rights and report final public orders related to consumer financial services. This aims to increase transparency and consumer protection in the nonbank sector. 5. FTC Safeguards Rule Amendment: Effective May 2024, this rule mandates nonbank financial institutions to report data security breaches involving 500 or more consumers to the FTC within 30 days. This underscores the importance of data security and consumer protection in the financial services industry. 6. Fair Lending and Open Banking Regulations: Federal regulators are expected to finalize updates to fair lending practices and introduce open banking regulations. These changes will require banks to reassess their technological and third-party partnerships to ensure compliance and mitigate consumer harm. These regulatory changes reflect a broad shift towards greater oversight and consumer protection in the financial services industry, emphasizing the need for banks to enhance their compliance, risk management, and operational frameworks.

Bankwest the digital bank! Bankwest branches to close in Western Australia after 129 years. Bankwest has announced it will close its branches by October 2024 and be a digital bank moving forward. Of the 45 Bankwest branches to close, 15 will be converted to CBA branches. Bankwest will transition to a digital bank in the next six months. 'Angus Sullivan, CBA’s retail banking boss, said the change was necessary to better serve customers who “value a simpler, digital experience”, adding that 97 per cent of Bankwest transactions are now conducted by app or online banking.' From the data shown on the Bankwest website: - 97% of all Bankwest transactions now completed digitally. - Fewer than 2% of customers are visiting a branch regularly. - WA branches average about 30 transactions per day, and in regional WA this halves to 15.

🏆 United Community shines with 15 Greenwich Excellence Awards in Middle Market and Small Business Sector! 🌟 #SuccessStory #AwardsSeason #UCBI 🏅 ### United Community Bank Receives 15 Prestigious Awards for Excellence in Commercial Banking **GREENVILLE, S.C.** - United Community Bank has once again been recognized for its exceptional performance in commercial banking, earning a total of 15 Greenwich Excellence and Best Brand Awards. This marks the eighth consecutive year that the bank has been honored for its commitment to providing top-tier service to middle market and small business clients. The awards, which include national recognition for Overall Satisfaction and Likelihood to Recommend, highlight United Community's dedication to delivering trust, value, and satisfaction to its customers. Rich Bradshaw, President and Chief Banking Officer of United, expressed delight at the accolades, emphasizing the bank's strong focus on commercial offerings and personalized customer service. United Community Bank received nine national awards and six regional awards across various categories, including Middle Market Banking and Small Business Banking. These accolades underscore the bank's excellence in areas such as customer service, trust, and overall satisfaction, positioning United as a standout performer in the industry. In a competitive field of over 500 U.S. banks evaluated, United Community Bank was one of only a select few – 23 in middle market banking and 39 in small business banking – to receive these prestigious awards. The recognition from Greenwich is a testament to the bank's ongoing commitment to providing best-in-class financial services to its clients. Coalition Greenwich, a leading global research provider in the financial services industry, conducted the evaluations based on feedback from nearly 28,000 executives nationwide. United's consistent performance and customer-centric approach have contributed to its success in earning a total of 52 Greenwich awards over the past eight years. About United Community Bank: United Community Bank, a financial institution under United Community Banks, Inc. (NASDAQ: UCBI), is dedicated to enhancing the financial well-being of its customers and communities. With $27.2 billion in assets as of December 31, 2023, and 207 offices across multiple states, including Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee, United offers a comprehensive range of banking, wealth management, and mortgage services. Source: United Community Bank Read the full article at: https://lnkd.in/gTd4Vktt

I have regular engagement with clients/prospects who understand the benefits that Open Banking can offer, but (understandably) have concerns regarding the use of such a vast and daunting amount of data. Below is a quick breakdown of just some of the questions I regularly hear from my clients/prospects, along with my own thoughts: Q: Where do we even start? There's so much data! Whilst we can't tell you what data you should be using in your decisioning (this will be based on each lenders own risk appetite), we can provide guidance around the type of data that many of our hundreds of lenders typically find predictive. These include (but aren't limited to): 💰 Income - Salary, benefits, pension etc 🚨 High risk indicators - frequent use of high cost short term credit, high gambling spend vs account turnover, potential loss of income, potential missed payments etc 🛒 Disposable income - weighted according to essential spend vs discretionary to help identify if the customer will be able to reasonably afford the credit you're looking to offer 📈 Financial Health Score - how does the customers financial health look and does this indicate they have a high likelihood of making credit repayments? Is there anything that is negatively impacting their financial health such as court fees, overdraft charges or high gambling use vs income? Q - Will this impact our ability to lend to customers? Open Banking can be an enabler rather than a blocker to lending. If you are unable to accept customers based on the credit bureau data alone (thin file/marginal decline/no CATO), and would've declined them anyway, Open Banking offers an opportunity to see additional data on this specific pot of customers to reach an informed decision. Q - Won't this add friction to our customer experience? Yes and no, depending on the use case. If you currently request manual bank statements from customers, Open Banking can actually help to streamline the customer experience, giving customers a digital way of sharing their bank transactions and resulting a more efficient process for your underwriters. For applicants that would've otherwise been declined, yes there is additional friction, but this friction is necessary; that is to help you, as a responsible lender, to better understand if the product you are offering is affordable. There is an incentive for the applicant to share their data with you of course, as it may result in them being able to obtain the loan, mortgage etc which they would've otherwise been declined for. 📞 Whether you are considering Open Banking, or have already implemented it (either with Equifax or a different provider), my door is always open for a chat to share my own learnings from the various clients I've got live. #Openbanking #Affordability #AISP

Sales pressure in the banking system is a significant issue that has been widely discussed in recent years. It refers to the intense demand placed on bank employees, particularly those in retail banking, to meet sales targets for financial products such as credit cards, loans, insurance policies, and investment products. This pressure can have several negative consequences: Unethical Sales Practices: High sales targets can lead to unethical practices, such as mis-selling products that aren't suitable for customers or pressuring clients into purchasing products they don't need. The most notorious example of this was the Wells Fargo scandal, where employees opened millions of unauthorized accounts to meet sales quotas. Employee Stress and Burnout: The relentless pressure to meet sales targets can lead to significant stress, burnout, and job dissatisfaction among bank employees. This can result in high turnover rates and a negative workplace culture. Erosion of Customer Trust: When customers feel that they are being pushed to buy products rather than receiving genuine financial advice, it can erode trust in the bank. This can damage long-term customer relationships and hurt the bank's reputation. Regulatory Scrutiny and Penalties: Banks that engage in aggressive sales practices can attract regulatory scrutiny and face substantial fines and penalties. Regulators in various countries have introduced measures to curb such practices, but the pressure to meet sales targets can still lead to violations. Misalignment of Interests: Sales pressure can create a misalignment between the bank’s goals and the customers' needs. Rather than focusing on providing value to customers, the emphasis on sales can lead to decisions that prioritize short-term profit over long-term customer satisfaction. Impact on Product Quality: The focus on sales can sometimes lead to the proliferation of complex and poorly understood financial products, which can increase the risk of financial instability and harm customers who may not fully understand what they are buying.To mitigate these issues, some banks have begun to rethink their incentive structures, shifting from product-specific sales targets to broader metrics of customer satisfaction and long-term relationship building. This approach aims to align the interests of the bank, its employees, and its customers, fostering a more sustainable and ethical banking environment.

I've seen this exact link used by many sales professionals to communicate a point that relates to their business (such as by my friend Seth Farbman). However I'd like to provide a little different perspective in looking at the underlying numbers, while not trying to sell anything.... As we take a look at these underlying numbers on bank closures the vast majority of them come from the banks that control a large percentage of the banking market (such as Wells Fargo which had the most closures). However there were very few closures in the bottom end of the market tied to the smaller regional and community banks. There are a lot of smaller community and regional banks out there that are continuing to expand and add branches though even now with the Fed at historical highs. This is because they value the one thing that the big banks don't, relationships and by extension relationship banking. One of the most important aspects of banking to the individual consumer should be their ability to be valued as something other than a line on the balance sheet and an account number. I encourage everyone that asks to foster a relationship with your local bank, and help them grow. I assure you the service you get in return will make you question why you ever did business with the banking behemoths. https://lnkd.in/eTYGxc4T

 CORE ACTIVITIES OF BANK BRANCH SHIFTED TO OTHER INCOME AREAS & PROFITABILITY Core activities of bank branches are mainly accepting deposits, lending money, facilitating transactions and offering various financial products. The conventional strategy mainly consists of acceptance of deposits, recycling the deposits to loans and provide services. The customer groups are individuals, small businessmen and corporates and the service line involves ATM cards, Credit cards, mortgage, pledge and hypothecation, money transfer, draft issue, vault and locker services etc. Before 2010, bank branches were very busy with manpower and activities. But financial instability hit the branches resulting in loss in the book of accounts in many branches.  Accumulating loss for consecutive years was a cause of concern to the management. Retail banking sales declined and branch activities started collapsing. A combination of micro and macro factors, inception of new technology, core banking, highly competitive scenario and change in customers choice and preference led the bank management to adopt new strategy for survival. Bank management resorts to increasing  digital sales, voluntary retirement of employees, facilities of online/net /ATM banking, mobile banking, payments in digital modes, centralization of some activities by opening retail loan cells, processing centers, corporate accounts group, bulk account opening centers and shifting of some core activities to the centralized cells. This strategy weakens the manpower and health of branches. Huge retirement of staff in last 10 years and the ongoing trend further aggravated the situation. In order to make the branch profitable, branch has to tap other sources like insurance, mutual fund, share trading, foreign currency dealing, demat account opening etc. for income generation deviating from its core business activities. Today’s bank is for the pensioners, senior citizens, farmers, women and ATM complaint lodging customers who do not generally prefer modern banking channels.  The young generation hardly visit the branches as they prefer alternative channels. In the changing environment, Bank branch does not show long queues now resulting in improvement in customer service.  The employees are now engaged in marketing and selling various bank’s products like insurance, mutual fund etc.to the walking customers. Allegations are reporting against the bank that the customers while visit the branch to open Savings or Current or locker accounts, banks insist them to purchase bank’s products like insurance or mutual fund or Demat. In some cases, the customers are lured by delivering wrong information about the product. So, account opening appears to be difficult to the customers because of this.  In fact, from bank’s business perspective, it’s a marketing drive to enhance other income, but from customer’s perspective, it’s against the ideology of free and fair banking practice. continued page 2   

 NCBA’S HIGH VALUE ACCOUNTS  CONTINUE TO GROW NCBA Bank registered 184 percent increase in high-value accounts exceeding Kshs. 500,000 in the period ending 2023. This is despite a cumulative decline of 40 percent of accounts holding more than half a million Kenyan shillings in the banking sector. According to the Central Bank of Kenya (CBK) annual bank supervision report of 2023, accounts with more than Kshs. 500,000 at NCBA Bank increased by 270,085 -  from 146,396 in 2022 to 416,481 in 2023-  translating to 184 percent rise. Growth In effect, the bulk of customers with above Kshs.  500,000 in their accounts bank with NCBA. Remarkably, NCBA is the only Kenyan bank that recorded an increase in the number of accounts with  Kshs 500,000 and above in the  period under review. This demonstrates the lender’s commitment to  exemplary customer experience and offering a wide array of innovative products. On the contrary, the number of accounts in the Kenyan banking sector as a whole holding more than Kshs. 500,000 decreased from 1,847,077 in 2022 to 1,110,232 in 2023. By the same token,  accounts with less than Kshs.  500,000 at NCBA increased by 4 percent in the  period under review. Previously ( 2021 – 2022) , NCBA witnessed a 10 percent increase in accounts with more than Kshs. 100,000 which rose from 132,972 in 2021 to 146,396 in 2022. Zero ledger fees Effective 1st July, 2024, NCBA stopped charging  monthly account fees for all its retail banking customers. This development is  expected to herald a new era for the lender, that will be   characterized by a  strong growth in all parameters . In particular, the waiver is expected  to accelerate the bank’s customer growth strategy as it endeavours  to scale up  its retail banking footprint, while  providing  customer-focused financial solutions. Financial inclusion NCBA has long been committed to enhancing  financial inclusion in all the countries it has a presence. “Our diversified business model has continued to demonstrate growth and resilience with strong contribution from our digital business and stable performance from our regional banking subsidiaries,” NCBA Group CEO, John Gachora noted while announcing results of the first quarter of 2024. With over 60 million customers spread out in five countries, NCBA  is set to reduce the cost of banking , hence enhancing  brand loyalty. NCBA    has been recognized by Brand Finance as the as Kenya’s second fastest-growing brand. Its  rating shot up by 4 per cent in 2024 to rank at position six  among the Top 25 Most Value Brands. This is a demonstration of the lender’s    relentless efforts in brand building that align well with its  customers’ needs. NCBA Group

How Digital Credit Reshapes Corporate and Retail Banking How to do digital credit processing the right way This area has a lot of room for innovation, but the most successful transformations had many things in common. These included: An analysis of the current status How long does it currently take from the time someone applies until they get cash-in-hand? Follow all the steps on that journey—such as how many people handle the application. How long does it take to move from one person to the next in the chain? How many people write reports, enter data over and over again, make mechanical mistakes that require re-handling and corrections, and how long does it sit in a pile before another person interacts with it? Automating right What do you automate? You can start with the very familiar SME lending which banks have dominated for years, and retail mortgage lending. Your priorities ought to be eliminating pain points for staff and applicants, assessing possible gains, and reducing overall complexity. Typically, the focus is on those seeking refinancing of existing financial arrangements. Following leading bank examples Banks that effectively navigated this transition could serve as inspiration or an example of how to streamline your workload and decision-making process. Take, for instance, one of NetGuru’s clients, a bank that leveraged its global expertise by assembling international specialists to offer insights into optimizing loan discovery opportunities, refining the lending process, and establishing efficient underwriting practices. Through this collaborative effort, they meticulously crafted a comprehensive blueprint for digitizing their lending operations. Focus on business outcomes One bank targeted a two-day time limit for responses to credit applications. Compared to current processes that now take several weeks, that may seem ambitious, but they achieved about an 80% success rate. Once you know your destination, you can plot a path to it much more easily. Known objectives create agility Your agile team sets the criteria for the Minimum Viable Product (MVP) along with the timetable. It defines the needed IT architecture and initiates cross-functional collaboration among business, risk, technology, and operations teams to address those components of change.